The accounting entry of the institutions who lend federal funds to other institutions is posted as __________?
Correct answer: B. assets on balance sheet
- A. liability on balance sheet
- B. assets on balance sheet
- C. income in income statement
- D. expense on income statement
Explanation
An institution lending federal funds has a claim against the borrowing institution, so the loan is recorded as an asset on its balance sheet. The borrowing institution records the corresponding obligation as a liability.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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